B-145142, MAR. 16, 1961

B-145142: Mar 16, 1961

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VETERANS ADMINISTRATION HOSPITAL: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 22. THE NEXT LOW BID ON ITEM NO. 158 OF $17.67 PER CASE WAS MADE BY SWIFT AND COMPANY. THE COMPANY STATED THAT ITS BID ON ITEM NO. 158 SHOULD HAVE BEEN $18.30 PER CASE INSTEAD OF $11.91 AS SHOWN. THE CONTRACTOR WAS INSTRUCTED TO DISCHARGE THE CONTRACT OBLIGATION AT THE PRICE BID AND SUBMIT TWO SETS OF INVOICES. THERE IS LITTLE ROOM FOR DOUBT THAT THE COMPANY MADE AN ERROR IN ITS BID. WHEN THE PARTY NOT IN ERROR SHOULD HAVE SUSPECTED OR HAD REASON TO KNOW OF THE EXISTENCE OF THE ERROR. RESCISSION OF THE CONTRACT IS ALLOWED. IF WHEN THE CONTRACT IS RESCINDED. THE INTENDED GOODS HAVE BEEN DELIVERED. RESTITUTION IS MADE ON THE BASIS OF THE REASONABLE VALUE OF THE FULL PERFORMANCE.

B-145142, MAR. 16, 1961

TO CONTRACTING OFFICER, VETERANS ADMINISTRATION HOSPITAL:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 22, 1961, WITH ENCLOSURES, FILE 5141/134 REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ARMOUR AND COMPANY ALLEGED IT MADE ON ITS BID OPENED DECEMBER 13, 1960.

BY INVITATION NO. 61-13 THE VETERANS HOSPITAL, FAYETTEVILLE, NORTH CAROLINA, REQUESTED BIDS FOR PACKING HOUSE AND DAIRY PRODUCTS FOR JANUARY, 1961. ARMOUR AND COMPANY BID, AMONG OTHER ITEMS, ON ITEM NO. 158, $11.91 PER CASE FOR FRESH EGGS. THE NEXT LOW BID ON ITEM NO. 158 OF $17.67 PER CASE WAS MADE BY SWIFT AND COMPANY. THE CONTRACTING OFFICER SUSPECTING AN ERROR CONTACTED ARMOUR AND COMPANY BY TELEPHONE AND REQUESTED THAT COMPANY TO VERIFY ITS BID ON THE ITEM INVOLVED. THE COMPANY STATED THAT ITS BID ON ITEM NO. 158 SHOULD HAVE BEEN $18.30 PER CASE INSTEAD OF $11.91 AS SHOWN, BECAUSE OF AN ERROR IN CONVERTING THE DOZEN PRICE TO A CASE PRICE.

YOU STATE THAT TIME DID NOT PERMIT SUBMISSION OF THE MATTER TO OUR OFFICE FOR A DECISION PRIOR TO AWARD SINCE ORDERS FOR PACKING HOUSE PRODUCTS MUST BE PLACED SUFFICIENTLY IN ADVANCE OF SCHEDULED DELIVERY TO PERMIT INSPECTION BY USBA. THE CONTRACTOR WAS INSTRUCTED TO DISCHARGE THE CONTRACT OBLIGATION AT THE PRICE BID AND SUBMIT TWO SETS OF INVOICES; ONE AT THE BID PRICE AND ANOTHER FOR THE DIFFERENCE BETWEEN THE BID PRICE AND THE INTENDED BID PRICE. THE RECORD INDICATES THAT THE CONTRACTOR HAS SATISFACTORILY DISCHARGED THE CONTRACT.

ON THE RECORD, THERE IS LITTLE ROOM FOR DOUBT THAT THE COMPANY MADE AN ERROR IN ITS BID, AS ALLEGED. HOWEVER, WHEN THE PARTY NOT IN ERROR SHOULD HAVE SUSPECTED OR HAD REASON TO KNOW OF THE EXISTENCE OF THE ERROR, RESCISSION OF THE CONTRACT IS ALLOWED. MOFFETT, HODGKINS AND CLARKE CO. V. CITY OF ROCHESTER, 178 U.S. 373; C. N. MONROE MANUFACTURING CO. V. UNITED STATES, 143 F.SUPP. 449 AND CASES CITED THEREIN. IF WHEN THE CONTRACT IS RESCINDED, THE INTENDED GOODS HAVE BEEN DELIVERED, RESTITUTION IS MADE ON THE BASIS OF THE REASONABLE VALUE OF THE FULL PERFORMANCE, LIMITED TO THE NEXT LOWEST CORRECT BID. C. N. MONROE MANUFACTURING CO. V. UNITED STATES, SUPRA; SHEPARD V. UNITED STATES, 95 CT.CL. 407; 26 COMP. DEC. 286; 2 COMP. GEN. 503; 17 ID. 841; AND 36 ID. 585.

ACCORDINGLY, THERE APPEARS NO LEGAL BASIS FOR PAYING THE CONTRACTOR FOR ITEM NO. 158 MORE THAN THE AMOUNT OF THE NEXT LOWEST CORRECT BID.